On September 22, 1999, the United States Department of Justice, under the Admistration of then-President William J. Clinton, filed a racketeering lawsuit against the major cigarette manufacturers and two industry affiliated organizations.the The U.S. Government sought $280 billion in penalties on the grounds that the tobacco companies had conspired to deceive the public about the dangers of smoking.

Specifically, the Department of Justice (DOJ) alleged that the cigarette industry has purposely and fraudulently misled the public about the risks and dangers of cigarette smoking. The government alleged that "the Defendants have engaged in and executed – and continue to engage in and execute – a massive 50-year scheme to defraud the public, including consumers of cigarettes, in violation of RICO". [Taken from DOJ Final Proposed Findings of Fact (FPFF), Executive Summary, page 1.]

DOJ's Proposed Finding of Fact in the case alleged that starting in 1953 the Defendant tobacco companies met and engaged in a conspiracy to launch a public relations campaign to counteract the growing body of scientific evidence showed cigarettes were harmful, while at the same time the Defendants' own internal scientific research confirmed the findings that cigarettes caused disease, death and addiction. The object of this campaign was to maximize the number of smokers and profits, and "to avoid adverse liability judgments and adverse publicity." {DOJ FPFF page 3].

Parts of the Government's case were dismissed. The government originally sought reimbursement for tobacco-related disease medical expenses paid as required by Medicare, according to the Medicare Recovery Act 42 U.S.C. 2651-53; and Medicare Secondary Payer Act, 42 U.S.C. 1395. The judge dismissed these claims, ruling that the statutes did not permit the type of recovery sought by the government.

Because the DOJ sought only equitable relief, and because such relief is only granted by a judge, the case was not heard by a jury, but a single Federal judge, Gladys Kessler of U.S. District Court.

Contents

Attempts to exert political influence over the case

A January 30, 2000 internal Philip Morris (PM) email written by Greg Little (Associate General Counsel for PM) indicates a strong and successful effort by PM to exert political influence over the course of the U.S. Department of Justice lawsuit against the American tobacco companies. Little credits PM's DOJ Team [Department of Justice Team] with silencing the White House on the suit, reducing federal funding for the suit, neutralizing political pressure around the suit and creating a beneficial atmosphere for the company during litigation.

The entire text of Little's memo is as follows:

I would like to take this opportunity to thank this group for doing such a great job. It was a privilege to work with you. When you look back to last year's State of the Union Address, I think most people assumed that the DOJ suit would turn into a constant barrage of attacks by the White House, joined by the Anti's and supported by a well-funded Justice Department suit. Instead, since the formation of the PM DOJ Team, Congress refused to fund the suit, the White House has been noticeably silent, and the Anti's have had to turn their attention elsewhere. You should consider it a tremendous accomplishment that, since the filing of the suit, the only comment from DOJ has been "we will do our talking in court." I suspect that view has little to do with professionalism, and everything to do with recognizing that this suit is not politically popular. You deserve great credit for creating that atmosphere and we in litigation greatly appreciate it. Now that you have neutralized the political pressure we will do our very best to have this suit dismissed on legal grounds. If we succeed, it will be due in large part to your efforts. Thank you.[1]

Conviction

After 6 years of litigation, 9 months of trial, hundreds of depositions and thousands of exhibits, on August 17, 2006 U.S. District Court Judge Gladys Kessler ruled that the Government had proven its case and found that the tobacco company defendants have violated the Racketeer Influenced Corrupt Organizations Act (RICO).

Final Findings

Based on the evidence presented in the case, Judge Kessler ruled that:

Defendants knew for fifty years or more that cigarette smoking caused disease, but repeatedly denied that smoking caused adverse health effects. Defendants publicly distorted and minimized the hazards of smoking for decades.

Defendants concealed and suppressed research data and other evidence showing nicotine is addictive, and withheld information about their internal research on addiction, from the American public, the government, and the public health community, including the United States Surgeon General. The Defendants acted this way to maintain profits by keeping people smoking and attracting new consumers, to avoid iability, and prevent regulation of the industry.

Defendants falsely denied that they can and do control the level of nicotine delivered to smokers to create and sustain addiction.

Defendants falsely marketed and promoted low tar/"light" cigarettes as less harmful than "full flavor" cigarettes to keep people smoking and sustain corporate revenues.

From the 1950s to the present, different tobacco companies using different methods have intentionally marketed cigarettes to young people under the age of 21 in order to recruit "replacement smokers" who would ensure the future economic viability of the Tobacco Industry.

A sectioned summary of the verdict, The Verdict Is In: Findings from United States v. Philip Morris, which compiles select quotes from 1,259 pages of Findings in a legal document over 1,700 pages long, from the Tobacco Control Legal Consortium. Sections are as follows:

Michael Janofsky, "Government's Racketeering Case Against Tobacco Companies Wraps Up Its First Phase," New York Times, April 22, 2005. "After seven months of testimony, the federal government's racketeering case against the nation's largest cigarette companies reached the end of its first phase on Thursday as lawyers disputed whether the companies had misled the public about the health effects of smoking. After a recess next week, the trial will move into its final stage, witness testimony on remedies that the judge, Gladys Kessler of Federal District Court, may apply if she decides in favor of the government."